'.\":i- 


1 


UC-NRLF 


$C    12   ^10 


GIFT  or 


Cost  Keeping 


for 


Newsprint  Paper  Mills 


Recommended  by 

COMMITTEE   ON    UNIFORM  COST  KEEPING 
NEWSPRINT   SERVICE  BUREAU 

COMMITTEE  ON    UNIFORM  COST  KEEPING 

CANADIAN  MILLS  ASSOCIATED  WITH  THE 

CANADIAN  EXPORT  PAPER  CO.,  Limited 


PERLEY  MORSE  &  COMPANY 

Cf.t^ttftkd  Public  Accountants 
New  Yoek 


•v.\i,  -      ■--■.,    ■"'"'Vvrjk't'i 


Digitized  by  the  Internet  Archive 
^    in  2007  with  funding  from 
I       IVIicrosoft  Corporation 


http://www.archive.org/details/costkeepingforneOOmorsrich 


Cost  Keeping 


for 


Newsprint  Paper  Mills 


Recommended  by 

COMMITTEE  ON    UNIFORM  COST  KEEPING 
NEWSPRINT   SERVICE   BUREAU 


COMMITTEE   ON    UNIFORM  COST  KEEPING 

CANADIAN  MILLS  ASSOCIATED  WITH  THE 

CANADIAN   EXPORT   PAPER  CO.,  Limited 


'     •  9     »  ■)  »      It 


PERLEY  MORSE  &  COMPANY 

Ceetified  Public  Accountants 
New   York 


Gii'T 


PRESS  OF  H.  K.  BKEWEB  &  CO. 
58  LIBEBTY  STREET  NEW  YORK 


PERLEY    MORSE    &    COMPANY 

CERTIFIED    PUBLIC  ACCODNTANTS 

SIXTT-OME    BROAD  WAT 

NEW  TORK 

TiLxraom  Bowui*c  GRXxn   7181 

CABLX  ADDRISS  "STANDIT" 


February  15,  1919. 

Owen  Shepherd,  Esq.,  Chairman, 
Committee  on  Uniform  Cost  Keeping, 
News-Print  Service  Bureau. 

E.  S.  Coleman,  Esq.,  Chairman, 

Committee  on  Uniform  Cost  Keeping, 
Canadian  Mills,  Associated  with  the 
Canadian  Export  Paper  Co.,  Limited. 

Gentlemen: 

In  accordance  with  your  instructions  we  have  planned  a 
system  for  uniform  cost  keeping  for  use  in  news-print  paper 
mills. 

In  submitting  this  report  to  you  for  consideration  we  desire 
to  say  that  we  have  tried  to  meet  all  conditions  surrounding  the 
industry,  except  as  to  inter-company  profits  and  losses  and  wood- 
lands operations. 

The  usual  fully  integrated  mill  has  been  used  as  a  standard; 
hence  some  parts  of  this  system  may  not  be  necessary  where  a 
mill  is  not  fully  integrated. 

The  addenda  furnishes  a  plan  for  handling  inter-departmental 
profits  and  losses  when  they  appear  on  the  books  and  contains  the 
necessary  forms  to  be  used  in  reporting  costs. 

We  have  submitted  the  system  in  full  to  the  Federal  Trade 
Commission,  Washington,  D.  C.  In  connection  with  this  we  refer 
you  to  their  letter  of  February  6,  1919,  addressed  to  us,  which  is 
reproduced  in  our  report. 

Respectfully  submitted, 


Certified  Public  Accountants. 


441227 


Pag*  3 


KEW    YO»K 

CHICAGO 

PHiLAD£LPBIA 

BOSTON 

ST.    LOUIS 

PITTSBURGH 

MILWAUKEE 

DETROIT 

SAM    FRAXCISCO 

LOS    AKGXLIS 

SEATTLE 

RESIDENT  PARTNERS 
G.   O.   MAY 
G.  R.  WEBSTER 
J.  E.  STERRETT 
J.  H.  BOWMAN 
J.  C.  SCOBIE 


CABLE  ADDRESS   "PRICEWATER"   NEW  YORK 


Price,  Waterhouse  &  Co. 

54    WILUAM    STREET 
NEW    YORK 


UONTREAL  LONDOM 

TORONTO  PARIS 

WINNIPEG  PETROGRAD 
VANCOUVER 


BUENOS    AIRES 
RIO    DE    JANEIRO 
VALPARAISO 


CAIRO 
ALEXANDRIA 


February  20th,  1919. 


Owen  Shepherd,  Esq., 

Chairman,  Committee  on  Uniform  Cost  Keeping,  News- 
print Service  Bureau,  New  York  City,  N.  Y. 

E.  S.  Coleman,  Esq., 

Chairman,  Committee  on  Uniform  Cost  Keeping,  Canadian 
Mills  Associated  with  Canadian  Export  Paper  Company, 
Limited,  Montreal,  P.  Q. 

Dear  Sirs: 

Pursuant  to  your  request  we  have  acted  in  an  advisory 
capacity  in  the  preparation  of  the  uniform  cost  accounting  system 
for  the  several  news-print  manufacturers  whom  you  represent, 
which  has  been  submitted  by  Messrs.  Perley  Morse  &  Company 
with  their  letter  to  you  under  date  of  February  15,  1919. 

Except  that  it  does  not  provide  for  cost  computations  of  wood- 
land operations,  we  think  that  the  accounting  principles  adopted 
for  the  system  as  a  whole  are  sound.  While  no  doubt  the  system 
requires  modifications  in  detail  in  order  to  adapt  it  to  the  require- 
ments of  individual  companies,  such  modifications  should  be  made 
without  altering  the  fundamental  outline  which  appears  to  be 
sufficiently  elastic  to  serve  all  purposes.  On  this  basis  we  recom- 
mend that  the  committee  submit  the  system  as  drafted  to  the 
respective  manufacturers,  and  urge  its  acceptance. 

It  might  be  mentioned  here  that  the  success  of  any  account- 
ing system  depends  very  largely  upon  the  cooperation  of  all  offi- 
cers and  employees  of  the  company,  and  this  fact  should  be  im- 
pressed upon  the  members  of  the  two  organizations.  We  suggest 
also  that  if  the  system  be  accepted  a  joint  committee  should  be 
appointed  for  the  purpose  of  advising  the  respective  manufacturers 
in  adapting  it  to  their  businesses,  and  of  adopting  any  measures 
that  may  be  deemed  desirable  to  ensure  the  proper  and  uniform 
installation  of  the  system  at  the  mills. 

Yours  very  truly, 


Page  4 


Federal  Trade  Commission 

WASHINGTON 
Office  of  the  Chairman 

February  6th,  1919. 

Dear  Sirs: 

The  Commission  has  examined  with  interest  the  proposed 
uniform  cost  system  for  news-print  manufacturers  designed  by 
you  on  behalf  of  the  Committees  on  Uniform  Cost  Keeping  of  the 
News-Print  Service  Bureau  and  for  the  Canadian  Mills  associated 
with  the  Canadian  Export  Paper  Company,  Ltd. 

It  is  not  possible  at  this  time  to  make  a  thorough  study  of  this 
matter  such  as  constructive  criticism  would  require,  but  such 
examination  as  we  have  been  able  to  make  satisfies  us  that  this 
system  embodies  in  the  main  the  principles  of  accounting  on  which 
the  cost  figures  in  the  news-print  price  proceeding  were  based. 

We  are  pleased  to  see  that  this  system  distinguishes  between 
manufacturing  cost  and  commercial  cost  and  that  the  items  going 
to  make  up  the  commercial  cost  of  news-print  are  kept  out  of 
inventory;  also  that  finishing  costs  have  been  segregated  in  the 
cost  of  news-print  roll  manufacturing,  so  that  the  cost  accounts 
show  the  unit  cost  for  a  commercial  ton  of  paper. 

We  believe  that  the  provision  for  showing  the  cost  of  news- 
print sheets  separately  is  an  important  improvement;  also  that 
the  plan  of  deducting  the  value  of  by-products,  such  as  screenings, 
from  the  cost  of  the  process  in  which  such  by-products  originate, 
is  the  correct  one  to  follow. 

By  direction  of  the  Commission, 

Very  truly  yours, 
« 

Chairman. 
To 

Perley  Morse  &  Company, 

61  Broadway,  New  York  City. 


Page  5 


COST    KEEPING    FOR    NEWSPRINT 
PAPER    MILLS 

This  system  of  accounts  distinguishes  between  MANUFAC- 
TURING COST  and  COMMERCIAL  COST  OF  GOODS  SOLD. 
The  latter  being  the  sum  of  the  Manufacturing  Cost  of  Sales,  Ship- 
ping Expense,  Selling  Expense  and  Administration  and  General 
Expense  for  the  period. 

Inventories  of  Finished  Goods  are  shown  at  Manufacturing 
Cost  and  the  principle  of  averaging  the  Inventory  on  Hand  at  the 
Beginning  of  the  Period  with  the  Production  During  the  Period  in 
determining  the  Unit  Cost  of  Goods  Sold  or  Used  is  recommended. 

Costs  should  be  calculated  for  bi-weekly  or  monthly  periods 
according  to  the  requirements  of  the  accounting  company  and, 
though  calculations  contained  herein  are  for  monthly  periods,  the 
principles  may  be  adapted  to  the  bi-weekly  closing. 

RAW  MATERIAL  STOCK   RECORDS 

The  cost  system  should  provide,  if  necessary,  for  perpetual 
inventories  to  be  shown  by  stock  records  for  the  following  articles : 

COAL 
FUEL  OIL 
SULPHUR 

LIME  AND  LIMESTONE 

WASTE  PAPER.     This  includes  all  papers  used  in  stock. 
MISCELLANEOUS  STOCK  MATERIALS.    Namely,  such 
items  as: 
Fillers,    including    Clay,    Talc,    Fluorine,    Starch,    Rice 

Flour,  Agalite,  etc. 
Alum 

Bleaching  Materials,  including  Bleach,  Lime,  Soda  Ash, 

Vitriol,     Sulphuric     Acid,     Caustic     Soda,     Alkali, 

Chloride  of  Lime,  Acetic  Acid,  etc. 

Color,  including  Colors  and  Chemicals  used  in  coloring. 

Sizing,  including  Rosin,  Soda  Ash,  Silicate  of  Soda,  Fish 

Oil,  Salt,  Alkali,  Glue,  etc. 

CONVERSION  SUPPLIES.     Namely  such  items  as: 

Pulp  Stones 

Screen  Plates,  including  New  Plates,  New  Recuts,  etc. 

Wires,  including  Fourdrinier,  Cylinder,  Dandies,  etc. 

Machine  Clothing,  including  1st,  2nd  and  3rd  Presses, 
Dryer  Belts,  Dryer  Felt,  Twines,  Jackets,  Deckle 
Cloth,  Cylinder,  Wire  Felts,  Apron  Cloth,  etc. 

Lubricants 
WRAPPERS 

FINISHING  MATERIALS 
MISCELLANEOUS 

The  above  accounts  are  charged  with  the  purchases  including 
freight  and  handling  into  stock  and  are  credited  with  the  costs 
of  the  amounts  consumed,  as  shown  by  those  accounts,  in  the  pro- 
duction of  Ground  Wood,  Sulphite  and  Paper,  leaving  a  balance 
representing  inventory.  Where  several  items  of  material  are  in- 
cluded under  one  heading,  subsidiary  stores'  records  showing  quan- 
tities and  unit  costs  of  individual  items  should  be  kept. 

Page  7 


FINISHED  GOODS  STOCK  RECORDS 

Perpetual  Inventories  of  the  following  Finished  Goods  should 
be  kept: 

LAPPED  GROUND  WOOD  (OWN  MAKE).  This  ac- 
count is  charged  with  the  cost  of  Lapped  Ground  Wood  made, 
transferred  from  Ground  Wood  Production  Account,  and  is 
credited  with  the  cost  of  the  amounts  sold  or  used,  leaving  a 
balance  representing  Inventory. 

LAPPED  GROUND  WOOD  (PURCHASED).  This  ac- 
count is  charged  with  purchases  including  freight  and  handling 
of  Lapped  Ground  Wood  and  is  credited  with  the  cost  of  the 
amounts  sold  or  used,  leaving  a  balance  representing  Inventory. 
NOTE. — Intermill  transfers  in  the  same  corporation  are  not  re- 
garded as  Purchases  and  Sales.     See  Addenda. 

LAPPED  SULPHITE  (OWN  MAKE).  This  account  is 
charged  with  the  Cost  of  Lapped  Sulphite  made,  transferred  from 
Sulphite  Production  Account,  and  is  credited  with  the  cost  of 
amounts  sold  or  used,  leaving  a  balance  representing  Inventory. 

LAPPED  SULPHITE  (PURCHASED).  This  account  is 
charged  with  purchases  including  freight  and  handling  of  Lapped 
Sulphite  and  is  credited  with  the  cost  of  the  amount  sold  or  used, 
leaving  a  balance  representing  Inventory.  NOTE. — Intermill 
transfers  in  the  same  corporation  are  not  regarded  as  Purchases 
and  Sales.    See  Addenda. 

UNFINISHED  NEWSPRINT  ROLLS.  This  account  is 
charged  with  the  cost  of  all  rolls  not  finished  during  the  month, 
transferred  from  Newsprint  Rolls  Production  Account,  and  is 
credited  with  the  cost  of  the  amount  used  in  making  sheets,  leav- 
ing a  balance  representing  Inventory. 

FINISHED  NEWSPRINT  ROLLS.  This  account  is 
charged  with  the  Manufacturing  Cost  of  Newsprint  Rolls  made 
and  finished,  transferred  from  Newsprint  Rolls  Production  Ac- 
count, and  is  credited  with  the  cost  of  the  amount  sold,  leaving  a 
balance  representing  Inventory. 

NEWSPRINT  SHEETS.  This  account  is  charged  with  the 
Cost  of  Newsprint  Sheets  made  and  finished,  transferred  from 
Newsprint  Sheets  Production  Account.,  and  is  credited  with  the 
cost  of  Newsprint  Sheets  sold,  leaving  a  balance  representing  In- 
ventory. 

SCREENINGS.  See  Treatment  of  Screenings  under  Ground 
Wood  and  Sulphite  Production  Accounts. 

MANUFACTURING  COST 

For  the  purpose  of  determining  manufacturing  cost,  the  pro- 
duction accounts  as  outlined  below  should  be  kept.  Debit  items 
have  been  numbered  and  a  full  explanation  of  each  is  given  under 
the  Details  of  Production  Accounts. 

WATER,  STEAM,  AND  ELECTRIC  POWER 

Separate  production  accounts  should  be  kept  for  determining 
the  cost  of  Water  Power,  Steam  Power  and  Electric  Power,  and 
the  cost  of  such  Power  should  be  charged  at  the  end  of  the  month 
to  the  production  of  Prepared  Wood,  Ground  Wood,  Sulphite  and 
Paper  in  proportion  to  the  amount  consumed  by  each.  Where 
Water  Power  or  Steam  Power  are  used  for  the  purpose  of  generat- 
ing Electric  Power,  the  Electric  Power  Account  should  be  charged 
with  the  cost  of  the  power  so  used  in  determining  the  cost  of 
Electric  Power. 

Page  8 


ACCOUNT  AA— WATER  POWER  PRODUCTION 

The  items  composing  this  account  are  classified  as  follows: 
Debits: 


101 

Labor 

102 

Water  Power  (Purchased) 

111 

Miscellaneous  Supplies 

112 

Repairs 

113 

Replacements 

114 

Depreciation 

115 

Taxes 

116 

Insurance 

Credits 

> : 

Electric  Power 

Ground  Wood  Raw  Slush 

Paper 

ACCOUNT  BB— STEAM  POWER  PRODUCTION 

The  items  ( 

composing  this  account  are  classified  as  follows 

Debits 

: 

1 

Coal 

2 

Fuel  Oil 

3 

Fuel  Wood 

101 

Labor 

110 

Lubricants 

111 

Miscellaneous  Supplies 

112 

Repairs 

113 

Replacements 

114 

Depreciation 

lis 

Taxes 

116 

Insurance 

Credits : 

Electric  Power 

Prepared  Wood 

Ground  Wood  Raw  Slush 

Sulphite  Raw  Slush 

Paper 

ACCOUNT 

CC— ELECTRIC  POWER  PRODUCTION 

The  items  ^ 

composing  this  account  are  classified  as  follows 

Debits 

; 

101 

Labor 

102 

Water  Power 

103 

Steam  Power 

104 

Electric  Power  (Purchased) 

110 

Lubricants 

111 

Miscellaneous  Supplies 

112 

Repairs 

113 

Replacements 

114 

Depreciation 

115 

Taxes 

116 

Insurance 

Credits: 

Prepared  Wood 
Ground  Wood  Raw  Slush 
Ground  Wood  Deckered  Slush 
Ground  Wood  Lapped  Stock 
Sulphite  Raw  Slush 
Sulphite  Deckered  Slush 
Sulphite  Lapped  Stock 
Paper 

Pag^  9 


ACCOUNT   DD— PREPARED   WOOD 

Due  to  the  dissimilar  conditions  surrounding  the  production 
of  Prepared  Wood  in  the  different  mills,  no  attempt  has  been 
made  to  standardize  the  accounting  methods  to  be  used.  It  is 
recommended  that  a  Prepared  Wood  Account  be  kept  which  will 
show  at  the  end  of  the  year  the  average  cost  per  cord  of  128 
cubic  feet  Prepared  Wood.  Such  cost  to  include  all  expenses  in 
connection  with  wood  vip  to  the  point  of  delivery  to  the  grinder 
room  or  chipper  room.  Prepared  Wood  should  be  charged  with 
Water  Power,  Steam  Power  and  Electric  Power  consumed,  with 
insurance  on  wood  pile  and  wood  rooms  and  with  depreciation  on 
wood  handling  equipment. 

It  is  recommended  that  the  wood  used  in  the  manufacture 
of  pulp  be  credited  to  this  account  at  the  estimated  average  cost 
per  cord  and  that  at  the  end  of  the  year  any  profit  or  loss  shown  in 
this  account  be  used  as  an  adjustment  of  the  cost  of  production 
for  the  year. 

ACCOUNT  EE— GROUND  WOOD  PRODUCTION 

This  account  is  divided  into  three  sections,  as  follows: 
Section  (a)   Cost  of  Raw  Slush. 
Section   (b)   Cost  of  Deckered  Slush. 
Section  (c)  Cost  of  Lapped  Stock. 

The  items  composing  these  sections  are  classified  as  follows: 

SECTION  (a)  COST  OF  RAW  SLUSH 

Dr.  4  Prepared  Wood 

"  101  Labor 

"  102  Water  Power 

"  103  Steam  Power 

"  104  Electric  Power 

"  105  Pulp  Stones 

"  106  Screen  Plates 

"  109  Belting 

'  "110  Lubricants 

"  112  Repairs 

"  113  Replacements 

"  114  Depreciation 

"  115  Taxes 

"  116  Insurance 

"  117  Manufacturing  Burden 

Cr.  Deckered  Slush — Section   (b) 

"  Lapped  Stock — Section  (c) 

"  *Screenings 

SECTION  (b)  COST  OF  DECKERED  SLUSH 

Dr.  5  Raw  Slush 

"  101  Labor 

"  104  Electric  Power 

"  107  Wires 

"  112  Repairs 

"  113  Replacements 

Cr.  Used  in  Newsprint 

"  Used  in  Other  Papers 

SECTION  (c)  COST  OF  LAPPED  STOCK 

Dr.       5     Raw  Slush 
"     101     Labor 
"     104     Electric  Power 


*  See  Treatment  of  Screenings. 
Page  10 


Dr.   107 

Wires                                             '■ 

"     108 
"     112 
"     113 
Cr. 

Machine  Clothing 

Repairs 

Replacements 

Lapped  Ground  Wood   (own  make)   In- 

« 

ventory 
*Conversion  Cost  Chargeable  to  Screenings 

ACCOUNT  FF— SULPHITE  PRODUCTION 

This  account  is  divided  into  three  sections,  as  follows: 
Section  (a)  Cost  of  Raw  Slush 
.Section  (b)   Cost  of  Deckered  Slush 
Section   (c)   Cost  of  Lapped  Stock 

The  items  composing  these  sections  are  classified  as  follows: 

SECTION  (a)  COST  OF  RAW  SLUSH 

Dr.  4  Prepared  Wood 

6  Sulphur 

"  7  Lime  and  Limestone 

"  101  Labor 

"  103  Steam  Power 

"  104  Electric  Power 

"  106  Screen  Plates 

*•  109  Belting 

"  110  Lubricants 

"  112  Repairs 

"  113  Replacements 

"  114  Depreciation 

"  115  Taxes 

"  116  Insurance 

"  117  Manufacturing  Burden 

Cr.  Deckered  Slush — Section  (b) 

"  Lapped  Stock — Section   (c) 

"  *Screenings 

SECTION  (b)  COST  OF  DECKERED  SLUSH 

Dr.      8  Raw  Slush 

101  Labor 

104  Electric  Power 

107  Wires 

112  Repairs 

113  Replacements 
Cr.  Used  in  Newsprint 

"  Used  in  Other  Papers 

SECTION  (c)  COST  OF  LAPPED  STOCK 


Dr. 

8 

Raw  Slush 

101 

Labor 

104 

Electric  Power 

107 

Wires 

108 

Machine  Clothing 

112 

Repairs 

113 

Replacements 

Cr. 

Lapped  Sulphite   (Own   Make)   Inventory 

<( 

♦Conversion  Cost  Chargeable  to  Screening" 

*  See  Treatment  of  Screenings. 


Page  11 


*  TREATMENT  OF  GROUND  AND  SULPHITE  SCREENINGS 

Where  Screenings  have  a  market  value  in  excess  of  the  cost  of  lapping 
such  excess  should  be  credited  to  the  Cost  of  Raw  Slush  before  the  cost  of 
that  product  is  determined. 

Screenings  are  generally  lapped  on  the  same  equipment  that  is  used  for 
lapping  merchantable  pulp  and,  therefore,  if  cost  of  lapping  Screenings  be 
credited  to  the  total  lapping  cost,  the  amount  remaining  will  be  the  amount 
applicable  to  merchantable  pulp.  In  order  to  determine  the  amount  of  this 
credit,  the  sum  of  the  items  of  Conversion  Expense  in  Section  C,  namely: — 
(101)  Labor,  (104)  Electric  Power,  (107)  Wires,  (108)  Machine  Clothing, 
(112)  Repairs,  and  (113)  Replacements,  is  d  -vided  by  the  total  tonnage  of 
Merchantable  Pulp  and  Screenings  lapped  and  an  average  cost  per  ton  deter- 
mined. This  average,  multiplied  by  the  tonnage  of  Screenings  lapped,  will 
give  the  cost  of  lapping  Screenings. 

An  account  should  be  kept  for  Screenings  and  should  be  charged  with  the 
cost  of  lapping  and  the  excess  value  above  such  cost,  and  should  be  credited 
tvith  the  amount  sold  or  used,  leaving  a  balance  representing  inventory. 

ACCOUNT  GG— NEWSPRINT  ROLLS  PRODUCTION 

This  account  is  divided  into  two  sections,  as  follows: 
Section  (a)  Cost  of  Unfinished  Rolls 
Section  (b)  Cost  of  Finished  Rolls 

The  items  composing  these  sections  are  classified  as  follows: 

SECTION  (a)  COST  OF  UNFINISHED  ROLLS 

Dr.       9  Ground  Wood  (Deckered  Slush)  Own  Make 

10  Ground  Wood  (Lapped)  Own  Make 

11  Ground  Wood  (Lapped)  Purchased 

12  Sulphite  (Deckered  Slush)  Own  Make 

13  Sulphite  (Lapped)  Own  Make 

14  Sulphite  (Lapped)  Purchased 

15  Waste  Paper 

16  Fillers 

17  Alum 

18  Bleaching 

19  Color 

20  Sizing 
101  Labor 

103  Steam  Power 

104  Electric  Power 

106  Screen  Plates 

107  Wires 

108  Machine  Clothing 

109  Belting 

110  Lubricants 

112  Repairs 

113  Replacements 

114  Depreciation 

115  Taxes 

116  Insurance 

117  Manufacturing  Burden 
Cr.  Finished  Rolls — Section  (b) 

"  Unfinished  Newsprint  Roll  Inventory 

SECTION  (b)  COST  OF  FINISHED  ROLLS 

Dr.  21  Newsprint  Rolls  (Unfinished) 

"  22  Wrappers 

"  23  Cores 

"  24  Sundry  Finishing  Material 

"  101  Labor 

Cr,  Finished  Rolls  Inventory 

Page  12 


The  Cost  of  Unfinished  Rolls — Section  (a) — is  calculated  on  the  basis 
of  actual  paper  made. 

The  Cost  of  Finished  Rolls — Section  (b) — is  calculated  on  the  basis  of  a 
Commercial  Ton  of  Paper,  including  Wrappers  but  excluding  Cores. 

ACCOUNT  HH— NEWSPRINT  SHEET  PRODUCTION 

This  account  is  kept  by  mills  manufacturing  sheets  and  is  in- 
tended to  show  the  average  cost  per  ton  of  sheets  produced.  It 
has  been  found  desirable  in  some  mills,  where  several  types  of 
sheets  are  produced  and  where  finishing  processes  vary,  to  find  the 
cost  for  specific  lots.  In  that  case  this  control  account  may  be 
supported  by  cost  sheets  for  each  lot. 

Waste  Paper,  resulting  from  cutting  rolls  into  sheets,  should 
be  credited  to  this  account  on  the  basis  of  the  market  value  of  such 
waste  before  the  average  cost  per  ton  of  sheets  is  determined. 
This  account  is  classified  as  follows: 

Dr.     21     Unfinished  Newsprint  Rolls 
"      22     Wrappers 
"      23     Sundry  Material 
"     101     Labor 
"     104     Electric  Power 
Cr.  Waste  Paper 

Newsprint  Sheets  Inventory 

COMMERCIAL  COST  OF  SALES 

For  the  purpose  of  determining  the  Commercial  Cost  of  Sales 
the  accounts  outlined  below  should  be  kept. 

SHIPPING  EXPENSE 

This  account  is  charged  with  all  material,  labor  and  expense 
in  connection  with  loading  and  shipping  finished  products.  In  ar- 
riving at  a  commercial  cost  such  expense,  unless  specifically 
chargeable,  should  be  divided  between  products  on  a  tonnage 
basis. 

SELLING  EXPENSE 

Any  selling  expenses  such  as  Salaries  in  Sales  Offices,  Adver- 
tising, Rent,  Stationery  and  Printing,  Telephone  and  Telegraph, 
etc.,  are  included  under  this  heading,  and  in  arriving  at  a  com- 
mercial cost,  where  not  specifically  assignable,  should  be  distrib- 
uted between  products  sold  on  a  basis  of  relative  selling  price. 

ADMINISTRATION  AND   GENERAL   EXPENSE 

Expenses  of  this  nature  should  not  be  included  in  manufactur- 
ing burden,  and  in  arriving  at  a  commercial  cost  should  be  divided 
between  products  sold  on  the  basis  of  relative  Manufacturing 
Costs,  and  Selling  Expenses.    Under  this  heading  are  included 

Salaries  of  General  Officers  not  assigned  to  production 
or  sales 

Accounting  Department 

Legal  Expense 

General  Office  Rent 

Telephone  and  Telegraph 

Stationery  and  General  Office  Supplies 

Bank  Charges 

Capital  Stock  Taxes 

Mercantile  Agencies 

Association  Dues 

Collection  Expense 

Etc. 

Page  13 


DETAILS  OF  PRODUCTION  ACCOUNTS 

(1)  COAL 

Account  BB — Steam  Power.  This  item  is  charged  with  the 
coal  consumed  during  the  month  in  the  production  of  Steam  and 
Coal  Inventory  is  credited. 

(2)  FUEL  OIL 

Account  BB — Steam  Power.  This  item  is  charged  with  the 
Fuel  Oil  consumed  during  the  month  in  the  production  of  Steam 
and  Fuel  Oil  Inventory  is  credited. 

(3)  FUEL  WOOD 

Account  BB — Steam  Power — This  item  is  charged  with  Fuel 
Wood  consumed  during  the  month  in  the  production  of  Steam  and 
Fuel  Wood  Inventory  is  credited. 

(4)  PREPARED  WOOD 

Account  EE  —  Ground  Wood  Section  (a)  —  This  item  is 
charged  with  the  estimated  cost  of  Prepared  Wood  used  in  the 
manufacture  of  Ground  Wood  Raw  Slush  and  Account  DD 
Prepared  Wood  is  credited.    Standard  cords  of  128  cubic  feet. 

Account  FF — Sulphite  Section  (a) — This  item  is  charged 
with  the  estimated  cost  of  Prepared  Wood  used  in  the  manufacture 
of  Sulphite  Raw  Slush  and  Account  DD  Prepared  Wood  is  credited. 
Standard  cords  of  128  cubic  feet. 

(5)  GROUND  WOOD  RAW  SLUSH 

Account  EE  —  Ground  Wood  Section  (b) — This  item  is 
charged  with  the  cost  of  Ground  Wood  Raw  Slush  deckered,  and 
Section  (a)  of  the  same  account  is  credited. 

Account  EE  —  Ground  Wood  Section  (c)  —  This  item  is 
charged  with  the  cost  of  Ground  Wood  Raw  Slush  lapped,  and 
Section  (a)  of  the  same  account  is  credited. 

(6)  SULPHUR 

Account  FF — Sulphite  Section  (a) — This  item  is  charged 
with  the  cost  of  Sulphur  used  in  the  manufacture  of  Sulphite  Slush 
and  Sulphur  Inventory  is  credited. 

(7)  LIME  AND  LIMESTONE 

Account  FF — Sulphite  Section  (a) — This  item  is  charged 
with  the  cost  of  Lime  or  Limestone  used  in  the  manufacture  of 
Sulphite  Slush  and  Lime  and  Limestone  Inventories  are  credited. 

(8)  SULPHITE  RAW  SLUSH 

Account  FF — Sulphite  Section  (b) — This  item  is  charged  with 
the  cost  of  Sulphite  Raw  Slush  deckered,  and  Section  (a)  of  the 
same  account  is  credited. 

Account  FF — Sulphite  Section  (c) — This  item  is  charged  with 
the  cost  of  Sulphite  Raw  Slush  Lapped  and  Section  (a)  of  the 
same  account  is  credited. 

(9)  GROUND  WOOD  (DECKERED  SLUSH)  OWN  MAKE 

Account  GG — Section  (a) — Unfinished  Rolls.  This  item  is 
charged  at  cost  or  at  a  transfer  value  with  the  amount  used  in  the 
manufacture  of  rolls.  If  charged  at  cost,  Account  EE — Section 
(b)  is  credited  with  the  full  amount.  If  charged  at  a  transfer 
value.  Reserve  for  Interdepartmental  Profit  and  Loss  on  News- 
print (see  Addenda)  is  charged  or  credited  with  the  difference 
between  cost  and  such  transfer  value,  according  as  the  price  is 
above  or  below  cost. 

Page  14 


(10)  GROUND  WOOD  (LAPPED)   OWN  MAKE 

Account  GG — Section  (a) — Unfinished  Rolls.  This  item  is 
charged  at  cost  or  at  a  transfer  value  with  the  amount  used  in  the 
manufacture  of  rolls.  If  charged  at  cost  Lapped  Ground  Wood 
(Own  Make)  Inventory  is  credited  with  the  full  amount.  If 
charged  at  a  transfer  value  Reserve  for  Interdepartmental  Profit 
and  Loss  on  Newsprint  (see  Addenda)  is  charged  or  credited  with 
the  diflference  between  cost  and  such  transfer  value  according  as 
the  price  is  above  or  below  cost. 

(11)  GROUND  WOOD  (LAPPED)  PURCHASED 

Account  GG — Section  (a) — Unfinished  Rolls.  This  item  is 
charged  at  cost  with  the  amount  used  in  the  manufacture  of  rolls 
and  Lapped  Ground  Wood  (Purchased)  Inventory  is  credited. 

(12)  SULPHITE  (DECKERED  SLUSH)  OWN  MAKE 

Account  GG — Section  (a) — Unfinished  Rolls.  This  item  is 
charged  at  cost  or  at  transfer  value  with  the  amount  used  in  the 
manufacture  of  rolls.  If  charged  at  cost,  Account  EE — Section 
(b)  is  credited  with  the  full  amount.  If  charged  at  a  transfer 
value,  Reserve  for  Interdepartmental  Profit  and  Loss  on  News- 
print (see  Addenda)  is  charged  or  credited  with  the  diflference 
between  cost  and  such  transfer  value  according  as  the  price  is 
above  or  below  cost. 

(13)  SULPHITE  (LAPPED)   OWN  MAKE 

Account  GG — Section  (a) — Unfinished  Rolls.  This  item  is 
charged  at  cost  or  at  a  transfer  value  with  the  amount  used  in  the 
manufacture  of  rolls.  If  charged  at  cost  Lapped  Sulphite  (Own 
Make)  Inventory  is  credited  with  the  full  amount.  If  charged  at 
a  transfer  value  Reserve  for  Interdepartmental  Profit  and  Loss 
on  Newsprint  (see  Addenda)  is  charged  or  credited  with  the 
diflference  between  cost  and  such  transfer  value  according  as  the 
price  is  above  or  below  cost. 

(14)  SULPHITE  (LAPPED)  PURCHASED 

Account  GG — Section  (a) — Unfinished  Rolls.  This  item  is 
charged  at  cost  with  the  amount  used  in  the  manufacture  of  rolls 
and  Lapped  Sulphite  (Purchased)  Inventory  is  credited. 

(15)  WASTE  PAPER 

Account  FF — Section  (a) — Newsprint  Rolls.  This  is  charged 
with  waste  paper  consumed  in  the  manufacture  of  Newsprint  Rolls 
and  Waste  Paper  Inventory  is  credited. 

(16)  FILLERS 

Account  GG — Section  (a) — Newsprint  Rolls.  This  item  is 
charged  with  Fillers  consumed  in  the  manufacture  of  Newsprint 
Rolls  and  Fillers  Inventory  is  credited. 

(17)  ALUM 

Account  GG — Section  (a) — Newsprint  Rolls.  This  item  is 
charged  with  Alum  consumed  in  the  manufacture  of  Newsprint 
Rolls  and  Alum  Inventory  is  credited. 

(18)  BLEACHING 

Account  GG — Section  (a) — Newsprint  Rolls.  This  item  is 
charged  with  Bleaching  Materials  consumed  in  the  production  of 
Newsprint  Rolls  and  Bleaching  Inventory  is  credited. 

Page  15 


(19)  COLOR 

Account  GG — Section  (a) — Newsprint  Rolls.  This  item  is 
charged  with  color  consumed  in  the  manufacture  of  Newsprint 
Rolls  and  Color  Inventory  is  credited. 

(20)  SIZING 

Account  GG — Section  (a) — Newsprint  Rolls.  This  item  is 
charged  with  Sizing  consumed  in  the  manufacture  of  Newsprint 
Rolls  and  Sizing  Inventory  is  credited. 

(21)  UNFINISHED  ROLLS 

Account  GG — Section  (b).  This  item  is  charged  with  the  cost 
of  Unfinished  Rolls  finished  and  Section  (a)  of  the  same  account 
is  credited. 

Account  HH — This  item  is  charged  with  the  cost  of  Un- 
finished Rolls  used  in  making  sheets  and  Unfinished  Rolls  In- 
ventory is  credited. 

(22)  WRAPPERS 

Account  GG — Section  (b).  This  item  is  charged  with  the 
cost  of  wrappers  used  in  finishing  of  Rolls  and  Wrappers  Inven- 
tory is  credited. 

Account  HH.  This  item  is  charged  with  the  cost  of  wrappers 
used  in  finishing  Sheets  and  Wrappers  Inventory  is  credited. 

(23)    CORES 

Account  GG — Section  (b) — Cores  should  be  billed  separately 
from  paper  and  this  item  is  chargeable'Only  with  the  estimated 
annual  depreciation  on  iron,  wood  and  paper  cores  and  with  ex- 
penses in  connection  with  returned  cores.  Such  depreciation  and 
expense  should  be  taken  up  on  a  tonnage  basis. 

(24)  SUNDRY  FINISHING  MATERIALS 

Account  GG — Section  (b).  This  item  is  charged  with  all 
other  materials  used  in  finishing  Rolls  such  as  Paste,  Glue,  etc., 
and  Finishing  Materials  Inventory  is  credited. 

Account  HH.  This  item  is  charged  with  all  other  materials 
used  in  finishing  sheets  and  Finishing  Materials  Inventory  is 
credited. 

(101)  LABOR  (Manufacturing) 

The  general  payroll  should  be  so  classified  that  each  account 
and  section  thereof  can  be  charged  with  all  labor  applicable  to  the 
process.  Labor  not  specifically  assignable  should  be  charged  to 
Manufacturing  Burden.  The  divisions  below  show  the  items  of 
labor  chargeable  to  the  various  accounts.  If  desired  analysis  of 
labor  may  be  shown  on  the  cost  sheet  according  to  respective  op- 
erations in  the  processes. 

Labor  in  Repairs  or  Replacements  is  not  included  under  this 
heading  but  is  chargeable  to  the  cost  of  repairs  or  replacements 
as  described  later. 

Account  AA — Water  Power.  This  item  is  charged  with 
labor  in  connection  with  conduits  and  water  wheels. 

Account  BB — Steam  Power.  This  item  is  charged  with  labor 
of  fireroom  engineers  and  assistants,  water  tenders,  firemen,  coal 
handlers,  ash  handlers,  boiler  cleaners,  feed  pump  men,  etc. 

Account  CC — Electric  Power.  This  item  is  charged  with  all 
labor  of  operating  prime  movers  in  the  electric  plant,  generators, 
switchboards,  etc. 

Page  16 


Account  EE — Ground  Wood — Section  (a)  Slush.  This  item 
is  charged  with  all  labor  in  Grinder  Room  and  Screen  Room  and 
such  miscellaneous  labor  as  is  directly  applicable  to  the  produc- 
tion of  Ground  Wood  Slush. 

Account  EE — Ground  Wood — Section  (b)  Deckers.  This  item 
is  charged  with  all  labor  in  the  operation  of  Ground  Wood  Deckers. 

Account  EE — Ground  Wood — Section  (c)  Laps.  This  item  is 
charged  with  all  labor  in  connection  with  Wet  Presses  and  Hy- 
draulic Presses  and  with  the  Piling  of  Lapped  Stock. 

Account  FF — Sulphite — Section  (a)  Slush.  This  item  is 
charged  with  all  labor  in  Chipper  Room,  Acid  Systems,  Digesters, 
Screen  Room  and  such  miscellaneous  labor  as  is  directly  applicable 
to  the  production  of  Sulphite  Slush. 

Account  FF — Sulphite — Section  (b)  Deckers.  This  item  is 
charged  with  all  labor  employed  in  the  operiation  of  Sulphite 
Deckers. 

Account  FF  —  Sulphite  —  Section  (c)  Laps. — This  item  is 
charged  with  all  labor  in  connection  with  Wet  Presses,  Hydraulic 
Presses  and  with  the  Piling  of  Lapped  Stock. 

Account  GG — Newsprint  Rolls — Section  (a).  This  item  is 
charged  with  all  labor  in  Beater  and  Machine  Rooms. 

Account  GG — Newsprint  Rolls — Section  (b).  This  item  is 
charged  with  all  labor  employed  in  the  finishing  of  rolls. 

Account  HH — Newsprint  Sheets.  This  item  is  charged  with 
all  labor  employed  in  cutting  and  finishing  Newsprint  sheets. 

(102)  WATER  POWER 

At  the  end  of  the  month  Account  AA,  Water  Power  Produc- 
tion, is  closed  and  the  total  cost  is  distributed  to  the  processes 
using  such  power.  The  unit  cost  per  horse-power  hour  is  de- 
termined and  the  charges  to  the  various  processes  are  made  on 
the  basis  of  the  quantity  used  by  each.  This  system  provides  only 
for  distribution  between 

Account  CC — Electric  Power 
Account  EE — Ground  Wood 
Account  GG — Paper 

The  scheme  is  capable,  however,  of  being  adapted  to  the  needs 
of  the  accounting  company. 

(103)  STEAM  POWER 

At  the  end  of  the  month  Account  BB,  Steam  Power  Produc- 
tion, is  closed  and  the  total  cost  is  distributed  to  the  processes  using 
such  power.  The  unit  cost  per  thousand  feet  of  steam  generated 
is  determined  and  the  charges  to  the  various  processes  are  made 
on  the  basis  of  the  quantity  consumed  by  each.  This  system  pro- 
vides for  distribution  between 

Account  CC — Electric  Power 
Account  EE — Ground  Wood 
Account  FF — Sulphite 
Account  GG — Newsprint  Rolls 

However,  the  scheme  may  be  expanded  to  meet  the  needs  of  the 
accounting  company. 

(104)  ELECTRIC  POWER 

At  the  end  of  the  month  Account  CC,  Electric  Power  Produc- 
tion, is  closed  and  the  total  cost  distributed  to  the  processes  using 
such  power.  The  unit  cost  per  kilowatt  hour  is  determined  and 
the  charges  to  the  various  processes  are  made  on  the  basis  of  the 

Page  17 


quantity  consumed  by  each.     This  system  provides  for  distribu- 
tion between 

Account  EE — Ground  Wood — Sections  (a),  (b),  and  (c) 
Account  FF — Sulphite — Sections  (a),  (b),  and  (c) 
Account  GG — Newsprint  Rolls — Sections  (a)  and  (b) 
Account  HH — Newsprint  Sheets 
As  in  previous  accounts  the  scheme  is  capable  of  expansion. 

(105)  PULP  STONES 

Account  EE — Ground  Wood — Section  (a).  This  item  is 
charged  with  the  cost  of  Pulp  Stones  used  in  the  manufacture  of 
Ground  Wood  Slush  and  Pulp  Stones  Inventory  is  credited. 

(106)  SCREEN  PLATES 

Account  EE — Ground  Wood — Section  (a) 

Account  FF — Sulphite — Section  (a) 

Account  GG — Newsprint  Rolls  —  Section  (a).  These 
items  are  charged  with  the  Screen  Plates  used  in  the  manu- 
facture of  the  above  products  and  Screen  Plates  Inventory  is 
credited. 

(107)  WIRES 

Account  EE — Ground  Wood — Sections  (b)  and  (c). 
Account  FF — Sulphite — Sections  (b)  and  (c) 
Account  GG  —  Newsprint   Rolls  —  Section    (a).     These 
items  are  charged  with  the  cost  of  wires  used  in  the  manu- 
facture of  the  above  products  and  Wires  Inventory  is  credited 

(108)  MACHINE  CLOTHING 

Account  EE — Ground  Wood — Section  (c) 

Account  FF — Sulphite — Section  (c) 

Account  GG  —  Newsprint  Rolls  —  Section  (a).  These 
items  are  charged  with  the  cost  of  Machine  Clothing  used  in 
the  manufacture  of  the  above  products  and  Machine  Clothing 
Inventory  is  credited. 

(109)  BELTING 

Account  EE — Ground  Wood — Section  (a) 

Account  FF — Sulphite — Section  (a) 

Account  GG — Newsprint  Rolls  —  Section  (a).  These 
items  are  charged  with  the  cost  of  belting  and  belting  sup- 
plies renewed  and  Belting  Inventory  is  credited. 

(110)  LUBRICANTS 

Account  BB — Steam  Power 
.  Account  CC — Electric  Power 

Account  EE — Ground  Wood — Section  (a) 

Account  FF — Sulphite — Section  (a) 

Account  GG — Newsprint  Rolls  —  Section  (a).  These 
items  are  charged  with  the  cost  of  lubricants  used  and  Lubri- 
cants Inventory  is  credited. 

(Ill)  MISCELLANEOUS  SUPPLIES 

Manufacturing  Burden: 

Account  AA — Water  Power 

Account  BB — Steam  Power 

Account  CC — Electric  Power 
These  items  are  charged  with  the  cost  of  supplies  not  speci- 
fically  enumerated,    such    as    Rubber    Boots,    Oil    Cans,    Waste, 
Shovels,  Brooms,  Lanterns,  etc.,  and  Miscellaneous  Supplies  In- 
ventory is  credited. 

Page  18 


(112-113)   REPAIRS  AND  REPLACEMENTS 

Distinction  Between  Additions  and  Improvements,  Repairs 

and  Replacements 

Additions  and  Improvements 

The  term  "Additions  and  Improvements"  embraces  all  such 
expenditures  made  for  New  Buildings  and  Machinery,  Additions 
to  Existing  Buildings  and  Machinery,  and  Excess  Value  of  Re- 
placements when  a  replacement  made  exceeds  the  amount  it 
would  have  cost  to  replace  the  property  as  it  was  originally  con- 
structed. Such  additions  and  improvements  should  increase  the 
standard  of  earning  power  of  the  original  investment  in  the  mill 
either  by  enlarged  facilities  or  by  substantially  decreasing  costs 
and  expenses. 

Repairs  (Material  and  Labor) 

This  includes  all  current  expenditures  recurring  from  day  to 
day  on  the  general  upkeep  of  existing  properties,  without  the  en- 
tire replacement  of  any  substantial  part  or  unit  thereof,  as  outlined 
under  "Replacements."  It  will,  of  course,  include  certain  replace- 
ments of  small  parts  that  are  not  substantial  parts  or  units,  and 
all  necessary  repairs  resulting  from  breaks,  leaks  and  other  various 
causes  to  the  small  parts  of  buildings  and  machinery. 

Replacements  (Material  and  Labor) 

This  includes  all  substitutions  for  capital  exhausted  or  become 
inadequate  in  service,  the  substitutions  having  substantially  no 
greater  capacity  than  the  things  for  which  they  were  substituted. 
When  a  substitute  has  a  substantially  greater  capacity  than  that 
for  which  it  is  substituted,  the  cost  of  an  article  of  the  same  capacity 
as  the  one  replaced  would  constitute  a  replacement,  the  remaining 
portion  of  the  cost  of  the  actual  substitute  would  constitute  an 
improvement. 

There  are  no  hard  or  fixed  lines  that  can  be  drawn  between 
"Replacements"  and  "Repairs,"  but  those  substantial  portions  of 
a  building  or  machine  that  tend  to  prolong  the  entire  life  of  the 
building  or  machinery  must  be  taken  as  the  basis.  The  replace- 
ment of  a  bolt,  nut,  screw  or  some  other  small  part  of  a  machine 
would  be  a  repair,  not  a  replacement;  but  if  the  unit  or  part  itself 
was  replaced  it  would  be  a  replacement,  provided  the  replacement 
of  the  part  was  made  because  it  had  become  obsolete  or  inadequate, 
or  because  it  had  become  broken  or  worn  out  through  the  general 
operation  of  the  machinery.  If  the  part  was  broken  through  acci- 
dent, it  would  be  a  repair  and  should  not  be  charged  as  a  replace- 
ment. 

The  units  of  a  building  are  its  walls,  floors,  roofs,  doors  and 
windows,  and  the  replacement  of  any  of  these  parts  in  whole  may 
be  chargeable  as  a  replacement. 

The  units  of  a  machine  are  the  separate  substantial  parts  of 
the  machine  which  serve  separately  in  its  construction  or  opera- 
tion. These  do  not,  of  course,  embrace  bolts,  nuts,  screws  or  such 
small  parts  as  belong  to  units  or  substantial  parts,  but  the  larger 
parts  necessary  to  the  main  operation  of  the  machine,  and  the  re- 
placement of  any  such  parts  is  properly  a  charge  to  Replacements. 
For  example,  if  one  or  two  boiler  tubes  were  replaced,  it  would  be 
a  Repair,  but  if  all  the  tubes,  or  the  major  part  of  them,  were  re- 
placed it  would  be  a  Replacement. 

The  cost  of  Additions  and  Improvements,  Replacements  or 
Repairs,  when  made  by  the  accounting  company,  should  include 
cost  of  labor  expended  and  material  used,  less  salvage,  if  any. 

It  is  recommended  that  a  job  order  which  will  fully  describe 
the  character  of  the  work  and  show  the  material  and  labor  con- 

Page  19 


sumed  be  kept  for  each  replacement  and  addition  and  improve- 
ment made. 

Whether  Replacements  shall  be  charged  to  costs  or  not  is  left 
to  the  judgment  of  the  accounting  company.  But  where  they  are 
of  substantial  amounts  it  is  recommended  that  they  be  spread  over 
a  period  of  time  in  order  that  the  costs  in  any  one  month  may  not 
violently  fluctuate.  This  applies  to  extraordinary  repairs  as  well 
as  replacements. 

Provisions  are  made  in  these  accounts  for  charging  Repairs 
and  Replacements  to  the  following: 

Account  AA — Water  Power 

Account  BB — Steam  Power 

Account  CC — Electric  Power 

Account  DD — Prepared  Wood 

Account  EE — Ground  Wood — Sections  (a),  (b),  and  (c) 

Account  FF — Sulphite — Sections  (a),  (b),  and  (c) 

Account  GG — Newsprint  Rolls — Sections  (a)  and  (b) 

Distribution  between  processes  should  be  made  direct  wher- 
ever possible,  and  where  not,  the  item  should  be  charged  to  Manu- 
facturing Burden  and  distributed  with  other  items  of  that  account. 

(114)  DEPRECIATION 

Depreciation  should  be  charged  to  the  various  processes  upon 
the  basis  of  the  total  value  of  equipment  in  each,  and  should  be 
charged  to  the  various  accounts  as  outlined  below. 

Account  AA — Water  Power.  This  item  is  charged  with  one- 
twelfth  of  the  estimated  annual  depreciation  on  dams,  water- 
ways, etc. 

Account  BB — Steam  Power.  This  item  is  charged  with  one- 
twelfth  of  the  estimated  annual  depreciation  on  boilers,  boiler 
room  equipment,  ash  conveyors,  coal  conveyors  and  steam  plant 
structure. 

Account  CC — Electric  Power.  This  item  is  charged  with  one- 
twelfth  of  the  estimated  annual  depreciation  on  all  prime  movers 
used  in  generating  electric  power,  dynamos,  switchboards,  trans- 
formers, transmission  lines  and  electric  plant  structures. 

Account  EE — Ground  Wood — Section  (a).  The  total  esti- 
mated depreciation  per  annum  on  Ground  Wood  equipment 
should  be  divided  by  the  estimated  annual  production  in  tons  and 
a  unit  cost  per  ton  determined.  The  actual  tonnage  production 
for  the  month  should  be  multiplied  by  this  unit  cost  per  ton  to 
arrive  at  the  monthly  charge.  Any  excess  or  shortage  at  the  end 
of  the  year  can  be  provided  for  by  a  retroactive  adjustment. 

Account  FF — Section  (a)  Sulphite 
Account  GG — Section  (a)  Newsprint  Rolls 

The  depreciation  charges  to  these  accounts  should  be  de- 
termined in  a  similar  manner  to  that  described  above  for  Account 
EE  Ground  Wood. 

(115)  TAXES 

A  general  account  for  taxes  on  land,  buildings,  etc.,  is  set  up 
on  the  books  and  is  charged  with  all  payments  thereof.  The  ac- 
count is  credited  each  month  with  the  estimated  amount  accrued 
which  is  distributed  to 

Account  AA — Water  Power 

Account  BB — Steam  Power 

Account  CC — Electric  Power 

Account  DD — Prepared  Wood 

Page  20 


Account  EE — Ground  Wood — Section  (a) 
Account  FF — Sulphite — Section  (a) 
Account  GG — Newsprint  Rolls — Section  (a) 

in  accordance  with  the  estimated  taxable  value  of  the  property 
used  by  each  process.  Excess  Profits,  Income  or  Business  Profits 
Taxes  are  not  included  under  this  heading. 

(116)  INSURANCE 

A  general  account  for  Prepaid  Insurance  is  set  up  on  the  books 
for  all  fire,  accident  and  employers'  liability  insurance,  and  is 
charged  with  all  premiums  paid.  The  account  is  credited  each 
month  with  the  proportion  expired  which  is  distributed  to 

Account  AA — Water  Power 

Account  BB — Steam  Power 

Account  CC — Electric  Power 

Account  DD — Prepared  Wood 

Account  EE — Ground  Wood — Section  (a) 

Account  FF — Sulphite — Section  (a) 

Account  GG — Newsprint  Rolls — Section  (a) 

in  accordance  with  the  estimated  insurable  value  of  the  property 
used  by  each  process. 

(117)  MANUFACTURING  BURDEN 

An  account  is  kept  for  Manufacturing  Burden  to  which  is 
charged  all  items  of  manufacturing  expenses  not  directly  ap- 
plicable to  production  accounts.  The  classification  of  such 
charges  is  governed  entirely  by  the  conditions  surrounding  each 
mill  and  therefore  only  a  general  idea  can  be  given.  The  follow- 
ing is  an  outline  of  some  items  within  the  meaning  of  this  account 
and  it  is  recommended  that  a  similar  analysis  be  kept: 

Mill  Superintendence 

Mill  Ofiice  Salaries  and  Expenses 

Chemical  Laboratory  Salaries  and  Expense 

Barn  and  Teaming 

Switching 

Demurrage 

Miscellaneous  Supplies 

General  Repairs  not  specifically  applied 

Yard  Expense 

Purchasing  Department 

Salaries  of  Officers  assigned  to  Manufacturing 

Profit  or  Loss  on  Hotel  and  Boarding  Houses 

Profit  or  Loss  on  Theaters 

Profit  or  Loss  on  Townsites 

School  Taxes 

Etc. 

This  account  is  credited  with  the  amounts  distributed  to 

Account  EE — Ground  Wood  Production — Section  (a) 
Account  FF — Sulphite  Production — Section  (a) 
Account  GG — Newsprint  Rolls  Production — Section  (a) 

It  is  recommended  that  this  account  be  worked  on  a  budget 
scheme  and  that  one-twelfth  the  estimated  annual  total  be  written 
oflF  each  month.  Distribution  between  Ground  Wood,  Sulphite 
and  Paper  should  be  made  on  a  tonnage  basis  figuring  two  tons 
of  Ground  Wood  as  equal  to  one  ton  of  Sulphite  or  Paper. 


Page  21 


ADDENDA 


INSTRUCTIONS    FOR   HANDLING  INTER- 
DEPARTMENTAL PROFITS  AND  LOSSES 

It  has  been  found  necessary  to  provide  for  unusual  conditions 
arising  in  the  accounting  systems  of  some  of  the  large  companies, 
as  described  below. 

Case  1.  Where  a  company  owning  several  mills,  each 
having  an  independent  accounting  system,  transfers  Ground 
Wood  or  Sulphite  between  mills  at  a  value  greater  or  less  than 
cost,  commonly  known  as  a  transfer  value,  thus  creating  an 
intermill  profit  or  loss. 

Case  2.  Where  a  mill  manufacturing  Ground  Wood, 
Sulphite  and  Paper  charges  such  Ground  Wood  and  Sulphite 
to  Paper  at  a  transfer  price,  thus  creating  an  interdepartmen- 
tal profit  or  loss. 

The  following  accounts  are  used  in  Case  1.  Inasmuch  as 
Ground  Wood  and  Sulphite  are  handled  in  an  identical  manner, 
the  illustration  serves  for  both: 

TRANSFERS  OUT  (Ground  Wood) 
TRANSFERS  OUT  (Sulphite) 

These  accounts  are  kept  by  the  shipping  mill  and  are  charged 
with: 

1.  The  actual  cost  of  the  product  shipped.    • 

2.  With  the  balance  of  profit  at  the  end  of  the  month  if  the 

shipments  have  been  billed  above  cost.  Such  profit 
being  transferred  to  the  receiving  mill  or  general  office 
books. 

The  accounts  are  credited  with: 

1.  With  the  billing  of  products  shipped. 

2.  With  balance  of  loss  for  the  month  if  shipments  have  been 

billed  below  cost.  Such  loss  being  transferred  to  the 
receiving  mill  or  general  office  books. 

TRANSFERRED  GROUND  WOOD  INVENTORY 
TRANSFERRED  SULPHITE  INVENTORY 

These  accounts  are. kept  by  the  receiving  mill  and  are  charged 
with: 

1.    With  products  received  by  transfer  at  billing  price  and 
with  freight  and  cartage  thereon. 

These  accounts  are  credited  with :  Amount  used  in  the  manu- 
facture of  paper 

Page  22 


RESERVE  FOR  TRANSFERRED  GROUND  WOOD 

INVENTORY 

RESERVE   FOR  TRANSFERRED   SULPHITE 
INVENTORY 

These  accounts  are  kept  by  the  receiving  mill  and  intended 
to  show  the  amount  by  which  the  Inventories  of  Transferred 
Products  are  over  or  understated.  These  accounts  are  charged 
or  credited  as  follows. 

If  the  transfers  received  during  the  month  were  billed  above 
cost  these  accounts  are  credited  with  the  profit  transferred  from 
the  shipping  mill. 

If  the  transfers  received  during  the  month  were  billed  below 
cost,  these  accounts  are  charged  with  the  loss  transferred  from 
the  shipping  mill. 

After  the  above  items  are  entered  the  account  will  show  a 
debit  or  a  credit  balance  accordingly  as  the  Inventory  Accounts 
of  Transferred  Products  have  been  over  or  undercharged.  For  in- 
stance, if  Mill  A  has  shipped  to  Mill  C  20  tons  at  $10.00  above  cost 
and  Mill  B  has  shipped  Mill  C  30  tons  at  $10.00  below  cost,  the 
entries  to  this  account  at  Mill  C  would  be 

30  tons  at  $10.00  below  =  $300.00  debit. 
20  tons  at  $10.00  above  =  $200.00  credit. 

Balance  50  tons  at  $2.00  below  ="-=  $100.00  debit,  or  in  other 
words  the  average  ton  of  product  received  during  the  month  was 
billed  at  $2.00  below  cost. 

This  account  is  further  charged  or  credited  with  the  amount 
of  profit  or  loss  on  transferred  products  used  in  the  manufacture 
of  paper.  In  the  example  shown  above,  suppose  40  of  the  tons  to 
have  been  used  in  Newsprint  Paper: 

50  tons  at  $2.00  below  =  $100.00  debit, 
40  tons  at  $2.00  below  =   $80.00  credit. 

Balance  10  tons  at  $2.00  below  =  $20.00  debit,  represent- 
ing the  amount  by  which  the  remaining  inventory  is  understated. 
The  credit  of  $80.00  is  charged  to  Reserve  for  Interdepartmental 
Profit  or  Loss  on  Newsprint  Rolls  and  represents  the  amount  of 
loss  by  which  the  cost  of  Newsprint  Rolls  is  understated. 

The  following  account  is  used  in  connection  with  Case  1  and 
also  provides  for  Case  2. 

RESERVE  FOR  INTERDEPARTMENTAL  PROFIT  OR 
LOSS  ON  NEWSPRINT 

This  account  should  show  at  the  end  of  each  month  all  profit 
or  loss  taken  on  interdepartmental  or  intermill  transactions.  It 
is  charged  with: 

1.  The  amount  transferred  from  Inventory  Reserve  in  Case  1 

when  the  transactions  result  in  a  loss. 

2.  With  the  difference  between  cost  and  the  transfer  price 

used  in  Case  2  when  the  transaction  results  in  a  loss. 

Page  23 


The  account  is  credited  with: 

1.  The  amount  transferred  from  Inventory  Reserve  in  Case  1 

when  the  transaction  results  in  a  profit. 

2.  With  the  difference  between  cost  and  the  transfer  price 

used  in  Case  2  where  the  transaction  results  in  a  profit. 


Pagt  24 


FORMS 


The  Forms  shown  in  the  Exhibits  enumerated  below  are  part 
of  the  accounting  system,  and  serve  to  show  the  information  which 
should  be  available  at  the  end  of  each  period.  The  statistical 
data  given  has  been  found  desirable  in  some  mills  and  may  be 
elaborated  to  suit  individual  requirements. 


Exhibit  AA- 
Exhibit  BB- 
Exhibit  CC- 
Exhibit  EE- 
Exhibit  FF- 
Exhibit  GG- 
Exhibit  HH- 


-WATER  POWER 
-STEAM  POWER 
-ELECTRIC  POWER 
-GROUND  WOOD 
-SULPHITE 
-NEWSPRINT  ROLLS 
-NEWSPRINT  SHEETS 


EXHIBIT  AA 

WATER  POWER 


Month  of 191.. 


MONTH 
TO  DATE 

PERIOD 
TO  DATE 

Water  Power  (Purchased)   

Replacements    

Depreciation 

Taxes    

Insurance  

TOTAL  

H.  P. 
CONSUMED 

DISTRIBUTION 

OF  COST 

FOR  MONTH 

Paper    

Ground  Wood 

Electric  Power 

TOTAL  

Unit  Cost  Per  H.  P.  Hour 

Page  25 


EXHIBIT  BB 

STEAM  POWER 


Month  of 191. 


MONTH 
TO  DATE 

PERIOD 
TO  DATE 

Coal       

Fuel    Oil   

Lubricants      

\f iscellaneous  SuddHcs   

Renairs                      

Renlacements 

Denreciation              ... 

Taxes    

Insurance  

TOTAL  

DISTRIBUTION 

TONS 
PRODUCED 

M.  LBS. 

STEAM 
USED 

C0AL 
USED 

LBS.  COAL 

PER  TON 

PRODUCED 

DISTRIBUTION 

OF  COST 

FOR  MONTH 

Paper 

1 

Prepared  Wood 

1 

TOTAL  

1 

i 

Cost  of  Steam  per  1,000  lbs. 


MONTH 


PERIOD 
TO  DATE 


Lbs  Water  Evaporated. 


Lbs.  Water  Evaporated  per  lb.  Coal  Combustible. 
Lbs.  Water  Evaporated  per  lb.  Coal  Actual 


EXHIBIT  CC 

ELECTRIC  POWER 


Month  of 191. 


MONTH 
TO  DATE 

PERIOD 
TO   DATE 

Labor                                                                                        • 

\A^at:er  Power 

Electric   Power  (Purchasec 

n 

Renlacements                          .           

Defireciation                                         

Insurance  ■ 

TOTAL  

DISTRIBUTION 

TONS 
USED 

K.  W.  HOURS 
PRODUCED 

K.  W.  HOURS 

PER  TON 

PRODUCED 

DISTRIBUTION 

OF    COST 

FOR  MONTH 

Paper         

Sulnhite              

riround  Wood 

Prepared  Wood 

TOTAL  

MONTH 

PERIOD 
TO   DATE 

Cost  of  Electricity  per  K. 

W.  hour 

Page  26 


EXHIBIT  EE 

GROUND  WOOD 


Month  of 191. 


TIME  RECORD 

GRINDER 
HOURS 

PRODUCTION 

MONTH 

PERIOD 
TO  DATE 

Number  1 

Number  2 

Total   Mercha 

Screenings    .. 

l'  ■ 

Shut  Down  for  Power.... 

ntable  Pulp... 

Shut  Down  for  Other  Rea- 

sons    

Production   of  Merchantable 

Total  Hours  

Pulp  per  Co 

rd  of  Wood. . 

AMOUNT 

COST  PER  TON 

MONTH 
TO  DATE 

PERIOD 
TO  DATE 

MANUFACTURING  COST 
Stock: 

Prepared   Wood,    Cords 
Conversion: 

OF  RAW  SLUSH: 

@ 

Renlacpments                        .               

Manufacturing  Burden 

Total  Conversion 

TOTAL                                             

Deduct:  Screenings    

TOTAL  MANUFACTURING  COST  OF  RAW  SLUSH... 

Tnn.t   PrniiufPii 

MANUFACTURING  COST  ( 
Stock: 

Raw    mneVi — Tnnf 

Conversion: 

3F  DECKERED  SLUSH: 

Wires                

Repairs               * 

Replacements   

TOTAL    MANUFACTURING    COST    OF    DECKERED 

Tniit   Prndurfii 

Used  in  Newsprint — Tons 
Used  in  Other  Papers — Tons. 

MANUFACTURING  COST 
Stock: 

Raw   9,\\fih — Tons 

Conversion:  Merchantable  Pul 
Screenings — Tons 
Labor 

OF  LAPPED  STOCK: 

p Tf»L< 

Electric  Power                                         

Replacements    

Total  Conversion 

i 

i 

Conv<»rRinn    Cnnf    nf    M^rchantahlp    Pulp — TntLt 

AHH:    Tnvpntnry — Rpginning- 

TOTAL    

npHiirt!    Tnvpntnry — F.nH 

TOTAL    

Dcrliirf-!  TTspH  in  Pj^per,  etc, —  Tnnn 

SHIPPING  EXPENSE    

ADMINISTRATION   AND   GENERAL   EXPENSES 

COMMERCIAL  COST  OF  i 
NET    INCOME   FROM    SAl 
SALES   

SALES 

.ES 

Page  27 


EXHIBIT  FF 

SULPHITE 


Month  of 191. 


TIME  RECORD 


DIGESTER 
HOURS 


PRODUCTION 


MONTH 
TO   DATE 


PERIOD 
TO  DATE 


Hours  Run 

Shut  down  for  Filling.... 
Shut  down  for  Repairs... 
Shut  down  for  Sundays  and 

Holidays  

Shut  down  for  other  Rea- 
sons    

Total  Hours  

Number  of  Cooks 

Average  Time  per  Cook. . 


Pulp. 


No.    1 

No.  2 

Total  Merchantable 

Screenings 

Production    of   Merchanta- 
ble Sulphite: 

Per  Cord  of  Wood 

Per  Digester  Cook 

Sulphur  Used  per  Ton 

Lime  Used  per  Ton 


COST  PER  TON 

AMOUNT 

MONTH                   PERIOD 
TO  DATE                TO  DATE 

MANUFACTURING  COST  OF  RAW  SLUSH: 
Stock: 

Prepared    WnnH,    Cnr/ir                                 fn) 

Sulphur 

Lime  and   Limestone 

Total  Stock 

Conversion : 

Labor    

Steam   Power    

Electric    Power    

Screen  Plates   

Belting    

Lubricants     

Repairs    

Replacements    

Depreciation    

Taxes    

Insurance    

Manufacturing  Burden    

Total  Conversion ; . 

TOTAL    

Deduct:  Screenings    

TOTAL  MANUFACTURING  COST  OF  RAW  SLUSH.. 

Tons  Prndured 

MANUFACTURING  COST  OF  DECKERED  SLUSH: 
Stock: 

Raw   S1iii;Vi — Tnnst                                 

Conversion: 

Labor 

Electric  Power  

Wires    

Repairs    



Replacements    

Total  Conversion 

TOTAL    MANUFACTURING    COST    OF    DECKERED 
SLUSH  

Tnnx  Prndured 

IJ.tt'd   in    Nemxprint.^    Tnn<: 
Used   in    other    Pnperx,    Tnn.t 

MANUFACTURING  COST  OF  LAPPED  STOCK: 
Stock: 

Raw  SliisVi — Tnn.t                                                           

Conversion:  Merchantable  Pulp — Tnns 

Sereeningx — Tnitt 

Labor 

Electric  Power 

Wires  

Machine  Clothing  

Repairs    

Replacements 

Total  Conversion 

— 

Deduct:    Cost   of   Lappinp   .Srrppninfrs — Tnus 

Conversion  Cost  of  Merchantable    Pulp — Tnn.i 

TOTAL  MANUFACTURING  COST  OF  LAPPED  STOCK 

Add:    Inventory — Beginning    . 



TOTAL    

Deduct:    Inventory — KnH 

TOTAL    

Deduct:  Used  in  Paper,  e\r.—  Tnns 

MANUFACTURING  COST   OF  SALE5;— ToHf 

SHIPPING  EXPENSE    

SELLING  EXPENSE  

ADMINISTRATION   AND    GENERAL   EXPENSE 

COMMERCIAL  COST  OF  SALES  . 

NET  INCOME  FROM  SALES 

SALES   

EXHIBIT  GG 


NEWSPRINT  ROLLS 


Month  of 191. 


TIME  RECORD  

Machine  Nc 

>. 

1 

2 

3 

4 

5 

6 

. 



Shut  down  for  Machine  Clothing. 

Shut  down  for  Other  Reasons 

TOTAL  HOURS  

■- 

%  OF 
STOCK 

QUANTITY 

AMOUNT 

COST  PER  TON 

PER  TON 
OF  PAPER 

TOTAL    USED 

MONTH 
TO  DATE 

PERIOD 
TO  DATE 

MANUFACTURING  COST  OF 
UNFINISHED  ROLLS: 
Stock: 

Ground  ^Aood   (^Declcered   Slush^ 

Ground  Wood  (Lapped)  Own  Make 
Ground  Wood    (Lapped)    Purchased 
Sulohite   (Deckered  Slush) 

Sulohite   CLaooedl    Purchased 

Waste  Paper 

Fillers   

Bleaching   

Color  

Sizing    

Total  Stock 

^ , 

Conversion: 

1 

Electric  Power  ... 

Screen  Plates   

Wires  

Machine  Clothing  

Belting    

Lubricants    

Repairs    

Replacements   

Depreciation    

Taxes  

Insurance  

Manufacturing  Burden 

Total  Conversion 

TOTAL   MANUFACTURING  COST  OF   UNFINISHED 
ROLLS— TflMf 

Deduct:  Cost  of  Rolls  not  Finished 
ROLLS   FINISHED— r«n.f 

— Tons 

FINISHING  COST 

Wrappers   

Cores    

Sundry  Material 

Labor  

TOTAT     TTTMKiWTMfi    Pr>QT 

TOTAL     MANUFACTURING     COST     OF     FINISHED 
ROLLS    

Cross  Weieht  of  Finished  Rolls — Tons 
Add:    Inventorv — RpR'inninp 



l\J I AL.    

Deduct:    Inventory — F.nd 



MANUFACTURING  COST  OF  SALES— Tonr 

SHIPPING  EXPENSE 

SELLING  EXPENSE  

ADMINISTRATION  AND  GENERAL  EXPEl 
COMMERCIAL  COST  OF  SALES 

MSE 

NET  INCOME  FROM  SALES 

Page  29 


EXHIBIT  HH 


NEWSPRINT  SHEETS 


AMOUNT 

COST  PER  TON 

MONTH 
ENDED 

PERIOD 
ENDED 

MANUFACTURING  COST   OF  SHEETS: 

Stnrlrr    TTnfinJchpH    NpwcpHnf    Rnll«5 — Trtnc 

Finishing  Cost: 

^Vranners                                        .                                   . .             ... 

Sundrv    Kinishinff    M^Ateria.1               .        .    .                   

I_^t)or                                           .       .           .                    

Electric  Power  

Total  Finishing  Cost 

Total       

Deduct:  Value  of  Waste  Paper — Tons 

TOTAT.  MPr,    COST  OF   SHKETS_Tn«c 

AH(1r    Tnventrvry — Rppinning- 

TOTAL    

ncHllptr     Tnvpntnry — F.nrl 

MANITFAr.TTIFTNf}   COST    OF    SALF.S— Tnnc 

SHIPPING  EXPENSE 

SELLING   EXPENSE    

ADMINISTRATION   AND    GENERAL    EXPENSE 

COMMERCIAL  COST  OF  SALES 

NET  INCOME  FROM  SALES 

SALES    

Page  JO 


I 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 
BERKELEY 

Return  to  desk  from  which  borrowed. 
This  book  is  DUE  on  the  last  date  stamped  below. 


\M« 


.49W 


LD  21-100m-9,'48iB399sl6)476 


Gaylord  Bros. 

Makers 
Syracuse,  N.  Y. 

P*T.J4N.2I,  1908 


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UNIVERSITY  OF  CALIFORNIA  LIBRARY 


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